Oil arbitrage

SunTrader · Apr 20, 2020

1957may10 said:
I have oil refinery stocks and it is green. I assume refineries get filled and people already buying a cheap oil.

Refineries work on a margin basis. Lower price = lower margin = lower profits.

1957may10 · Apr 20, 2020

They should give it for free, because to hold it will be even expensive.

1957may10 · Apr 20, 2020

SunTrader said:
Refineries work on a margin basis. Lower price = lower margin = lower profits.

Yes, therefore I surprised why it holds the price, even was green at time to time.

Amun Ra · Apr 20, 2020

SunTrader said:
Refineries work on a margin basis. Lower price = lower margin = lower profits.

Crack spread right now is pretty high with the drop. .71 cent gas and $5 oil = about $24 spread. Heating oil is better at .91 cents which equals $33. Those are pretty decent assuming gas and heating oil doesn't drop.

SunTrader · Apr 20, 2020

Baltic Clean Tanker Index

Rising not so much because oil is being transported to its destination but because a lot of tankers are now being used as storage.

FrankInLa · Apr 20, 2020

Guys, who still does not get it that it will go to zero by Tuesday? It's the may contract on which the current CFDs are still based on (the ones trading view shows, for example) . Also spot prices go close to zero because World storage capacity is REACHED. Are some reading delayed news feeds or what is going on?

SunTrader · Apr 20, 2020

Amun Ra said:
Crack spread right now is pretty high with the drop. .71 cent gas and $5 oil = about $24 spread. Heating oil is better at .91 cents which equals $33. Those are pretty decent assuming gas and heating oil doesn't drop.

Yes but that is right now. "Things change" and anyway right now today refiners are working off older prices.

SunTrader · Apr 20, 2020

FrankInLa said:
Guys, who still does not get it that it will go to zero by Tuesday? It's the may contract on which the current cfd is still based on. Also spot prices go close to zero because World storage capacity is REACHED. Are some reading delayed news feeds or what is going on?

CFD's traders don't get it. Futures rule. Traders go where the money is.

FrankInLa · Apr 20, 2020

Its irrelevant. World storage capacity has been exhausted. Any additional barrel of oil that can't be consumed or stored is worthless. Less than worthless, it costs money to dispose of or even more money to shut down certain types of wells.

SunTrader said:
CFD's traders don't get it. Futures rule. Traders go where the money is.

Amun Ra · Apr 20, 2020

FrankInLa said:
Its irrelevant. World storage capacity has been exhausted. Any additional barrel of oil that can't be consumed or stored is worthless. Less than worthless, it costs money to dispose of or even more money to shut down certain types of wells.

How long before they're paying people to use their swimming pools to store oil?